Deputy Manager - Hr, Ir And Admin
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Consultant & G.m.
Sr. Hr Manager
Statutory Complaince/labour & Employment
Hrm, Ir & Adminstration
Recuritment & Employee Relations
11th April 2013
11th April 2013 From India, New Delhi
It is a matter of confussion. But EL is long time calculated in basic. Why?. Here is the facts.
Basic >= Minimum wages per day * Total No of days present. i.e if M.W is 170 then basic per month is 4420.
So all other allowances that you give him is actually helping him to come to this company for working. Eg: HRA, In order for him to come and work in a n organisation, he needs to have shelter. So you pay him for his shelter. So its an added money you give him to come and work. Only basic wages is the salary that you give for his work done.
So if an employee is on leave then he has not worked. So you automatically cut his allowance to. So whay pay him his house rent if he didn'e come for work. Hope I was not arrogant towards the employees side.
11th April 2013 From India, Bangalore
12th April 2013 From India, Delhi
What i suggested you in my last post is the same what the practice maximum organisations are following.
While working period if one need EL then means full day salary, not basic.
But leave encashment is entirely depend upon the company to company.
Case 1 : If the company policy says that company will deduct / pay notice period on basic the leave encashment must be on basic salary.
Case 2 : If notice period deduction / Payment will be on Gross Salary then leave encashment must be on Gross salary only.
Policy of leave encahsment is totally based upon the notice period, and that must be well defined at the very beginning with the office policy, not at the time of encashing leaves and searching the way out.
Chill HR !!
12th April 2013 From India, Gurgaon
However I am repeating certain points as it has come up for discussion once again
1. When an employee is availing leave whether it is earned leave or casual leave or sick leave, his full salary is given. If an employee 's basic salary is Rs 1000 and this other allowances are Rs 1000, then he gets Basic plus other allowances full when he or she avail leave with pay
2. When an employee gets encashment of leave,then generally Basic plus DA is given The argument here is that when an employee avails encashment his HRA and other allowances are already given in terms of salary. The logical argument is there is no need to pay the same amount twice.
12th April 2013 From India, Chennai
In one company where I was working, the management gave me encashment of Sick Leave eventhough I was there for three years only. They gave it as a matter of goodwill. I have given encashment of CL for certain category of employees
12th April 2013 From India, Chennai
I have the same doubt as Gurgoun HR.
The thing is only EL/Pl is cash-able at the end of the year. It is said as Leave with Wages in Factories act. i.e 1 day EL for every 20 days.
SL is always calculated in two ways (60 days once). If I'm wrong pl correct me. One for Employees covered under ESIC and the rest.
If covered under ESIC, the employee shall give a writ to the HR dept. The HR shall co-ordinate with the ESIC official and get the payment done for the employee through bank.
If the Employee is covered under the Medical allowance (i.e above 15000), then the company shall avail SL for the Employee.
Hope I was reight... Pl correct Me...
12th April 2013 From India, Bangalore
" Section 79 (3) of Factory Act 1948 states that If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service, during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to WAGES in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death, calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section(1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made" Now when we taking of WAGES it will come under Payment of Wages Act not Minimum Wages Act. so the rule I believe is contradictory in itself"
12th April 2013 From India, Delhi
It actually depends on individual companies. and very few companies calculates the leave encashment on Gross salary to attract and retain the people. As far as Sick leave is concerned, it is encashed so that the employee would not take the sick leaves even.
12th April 2013 From India, Bangalore
13th April 2013 From India, Thiruvananthapuram
The query has got some bugs in it. Is it about calculation of EL or calculation of salary during EL. The answers would depend on the query. Presuming that he requires clarification only as to -
1) how to calculate leave salary for the EL one avails EL under Factories Act/Rules as he says he is in a manufacturing Co.
2) And the wages for EL is not "Encashment of EL" or "Encashment on cessation of employment" So this discussion is not about it.
If So let us see what the Factories Act/Rules says about it -
Wages during Leave Period. For the period of leave allowed to a worker according to rules, he shall be paid at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave~The average rate is to be calculated, exclusive of any overtime and bonus, but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food-grains and other articles. The cash equivalent, referred to above, is to be computed according to the method used when calculating the extra wages payable -for overtime work. (See. post)-Sec. 80
Also go thro' similar discussions in these links:
<link no longer exists - removed>
13th April 2013 From India, Bangalore
EL= Basic+DA/26*Remaining days, as simple is this.
But if employee will on leave you deduct the payment from gross not only from basic, so pay them on Gross,
For you the formulla will be:
EL= Gross/26*remaining days
CL,SL, never encash.
15th April 2013 From India, Jodhpur
# If your question pertains to "workman" - The EL should be considered on the Basic+DA+and allowances.
In short the amount he will get (wage for a day) if he avails that Leave.
# In case of Non workman (executives) the company can have its own policy whether to pay on Basic only or on total CTC depending upon the objective- weather you want employees to avail more leaves and help them to maintain work-life balance or you want them to put more days for company and pay for it to motivate them.
Hope this helps you.
99 98 97 10 65
15th April 2013 From India, Mumbai
17th April 2013 From India, Thiruvananthapuram
I agree with our seniors;
that EL/PL Encashment is on Basic+DA..(whether working or ex-employee..)
i.e. EL/PL= Basic+DA/26*No. of Days
EL/PL availed/leave taken is on Gross Salary..(which means an employee is working within a company, however he/she has taken leave(s) for some personal exigencies)
i.e. EL/PL= Gross Salary/30*No. of Days
I hope am not mistaken, however if am so, I request seniors to correct me & please share your knowledge with us..
19th April 2013 From India, Mumbai
It is appalling to see so much confusion with a simple concept as Earned Leave; and I think it calls for an Act to have a Certifying Body for HR Managers.
In what directions should a company act if the concerned HRs give these kinds of contrary opinions??
Imagine the situation if the matter was about Medicine & Surgery; Civil Engineering or say, Finance ?? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T.Sivasankaran.
5th June 2013 From India, Delhi
Pl go through this.
Factories Act, 1948 [sec - 80 (1)]
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles:
They never mentioned other allowances. Its that Pay the Basic + DA + Cash equivalent that u would have paid if he would have come to the company.
Pl correct me If I'm Wrong
7th June 2013 From India, Bangalore
As per the Act whether its S&E or Factory's Act it should be 36 days pa i.e EL 12, SL 12 and CL 12.
SL means Sick leave can be carry over to next year (discretion of the management) as the employee will not be sick in the current year but he or she can be next year for this purpose its carried over to next year and ITS NOT ENCASHABLE AMT
For CL and EL or PL its encashable by the company. In some company, LTA can be adjusted against their PL after submitting the proof.
As per the Act the leave policy is based on the calculation on BASIC + DA OR VDA not gross as this affects the employer outflow. BASIC + DA oR VDA / 30 * no of days available (basic will be last salary drawn as per the policy of leave)
any deviation pl infm me
Payroll Management consultant
27th August 2014 From India, Chennai
My name is Ashish Rana i am working in a Delhi based company i just want to know that if our manpower is working as a contractor in a Haryana based company ( our customer ) then does it necessary for us to pay the leave encashment to our staff as per the "Haryana leave with wages rules" or we should pay the leave enashment as per "Delhi shops & establishment rules".
23rd June 2015 From India, Jaipur
I dont know on which behalf they said,
Everyone must read that factory act because it has cleared all the query regards this read chapter 5
EL payment must be on total full time earning of employes (Note factory can be exempted from this section if they provide better leave facility to employees but it should be approved in standing order of Company)
So clearly it should be on gross salary
i also know that number of company are giving el encasement on basic it is totally illegal if they have not approved leave policy
24th June 2015 From India, Faridabad
Leave encashment does not includes the SL and CLs. As per most of the Shops and Establishment acts leave encashment is only on Earned leave. The caliculation is on Basic generally and varies from company to company as a practice.
Pl. refer to the appropriate leagal positions before posting anything.
30th June 2015 From India, Hyderabad